Bitcoin Becomes Bearish 🐻
Bitcoin Becomes Bearish
On Friday, Bitcoin rallied past $40,000 for the first time ever, almost reaching $42,000. Bitcoin was up over 300% in 2020. But what was the catalyst for the continued success of Bitcoin? Rallying past the $30,000 mark a little over a week ago, Bitcoin is quickly gaining traction with young investors and institutional investors alike.
Unlike Bitcoin’s 2017 rally driven mainly by retail investors, Bitcoin’s 2020 rally is driven by big institutional investors. Like gold, Cryptocurrency is seen as a hedge against inflation, which makes investing in Cryptocurrencies like Bitcoin attractive. And amid the uncertainty caused by the pandemic, many retail investors are using Bitcoin as a safe haven, like gold.
Institutional investors were initially skeptical about investing in Bitcoin. Cryptocurrency is a relatively new instrument, so investors weren’t that confident putting their money in such a mysterious instrument. But, as Wall Street billionaires began to publicly support and invest in Crypto, mainstream investors have become more confident and bullish on cryptocurrencies like Bitcoin, driving this massive rally.
Mobile payment company Square and business software company MicroStrategy have added millions of dollars of Bitcoin to their balance sheets. And as Bitcoin’s popularity continues to grow, PayPal has added support for cryptocurrency transactions, making crypto accessible to millions of potential buyers.
Despite the 2020 rally, on Monday morning, Bitcoin dropped 20% to $31,000. Bitcoin is now in a bear market. As Bitcoin gains traction with institutional investors and retail investors alike, it will be interesting to see what happens to Bitcoin in the new year.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.